Over a year since the pandemic put millions out of work and and onto government aid, Americans’ finances are reportedly bouncing back.
More than half of Americans say they’re in financial recovery mode, according to Northwestern Mutual’s latest 2021 Planning & Progress Study that surveyed 2,000-plus American adults in March 2021.
The annual study found that both personal savings and retirement nest eggs have grown year over year: Average personal savings have increased over 10% ($65,900 to $73,100), while average retirement savings have seen a bigger jump of 13% ($87,500 to $98,800).
“We’re seeing a nation still reeling from the financial instability that the pandemic has dealt, but there’s also evidence that a promising number of people are on their way back,” says Christian Mitchell, executive vice president and chief customer officer at Northwestern Mutual.
A closer look at Northwestern Mutual’s findings
Whileprogress varies across the board, with most survey respondents saying they are in mid-stage financial recovery, nine out of ten people who report being in recovery mode plan to eventually see a full financial comeback to pre-pandemic levels.
As Americans make up ground, however, improvement has not been seen everywhere. Some individuals may have adopted better savings habits, while others still struggle to have enough to cover their monthly expenses.
“While it’s great to see progress, it’s also important to recognize that the setbacks are not equally distributed,” Mitchell says. Northwestern Mutual’s press release states that a third (33%) of people report having been able to save more over the last year, but nearly an equal third (31%) say they are saving less or stopped saving altogether. One in ten (9%) say they’ve had to dig into savings and are going backwards.
What to do with your money when “recovering”
While in recovery mode, capitalize on your momentum by making sure you have a few key financial steps taken care of.
Pay off high-interest credit card debt, build an emergency fund and pay yourself back by investing.
Balance transfer credit cards give you time to pay off your debt without accruing additional interest. The U.S. Bank Visa® Platinum Card is a popular choice with an introductory 0% APR for the first 20 billing cycles on both your balance transfers and new purchases (after, 14.49% to 24.49% variable APR). This means you have over a year and a half to pay off your credit card debt while you are getting your finances back on track.
When building an emergency fund, consider a high-yield savings account like the Marcus by Goldman Sachs High Yield Online Savings that earns you an above-average APY, has no fees and is easily accessible on mobile.
On the road to recovery, investing can help you further increase your savings and retirement fund. Make sure you are contributing enough to your 401k to get your employer match, if you have one, and look into free stock trading platforms such as Ally Invest and Fidelity.
Not yet in financial recovery mode?
You can still help yourself feel financially secure by at least making a plan of how to manage your money now and in the future.
This may entail creating a budget that limits spending beyond the necessities and putting any additional cash you have in a savings account. Among the third of Americans from Northwestern Mutual’s study who say they have been able to save more in the last year, most attribute it to reducing their discretionary expenses and prioritizing saving over spending.
